Sainsbury's boss Coupe targets return to profit growth

The supermarket giant posted an 8.2% drop in statutory pre-tax profit to £503m during the 52 weeks to March 11.

Underlying pre-tax profits declined for the third straight year, to £581m, as like-for-like sales in its core grocery business slipped 0.6%.

Sainsbury’s has faced criticism from some quarters after suffering declining food sales in a market where big four rivals Tesco and Morrisons have built momentum.

But Coupe said Sainsbury’s remained focused on its plan to “build a business for the future” and reiterated his confidence that profits will move in the right direction again in the coming years.

“We outlined our strategy over two-and-a-half years and we are getting on and executing it. Our job is to build a business for the future,” Coupe said.

“The UK grocery industry is one of the most challenging, if not the most challenging in the world but we also believe we’ve got a platform for future profit growth.

“We think over a three-to-five year period we can deliver strong and steady profit growth.”

Coupe added: “It’s a challenging environment and it’s also uncertain. We have to reflect that in the way we run our business.

“But we think we’ve been pretty resilient against a backdrop of a very challenging environment.”

‘Get out of jail card’

Some analysts have suggested that Sainsbury’s has taken its eye off the ball of its core grocery division following last September’s £1.4bn acquisition of Argos and Habitat.

Retail Vision director John Ibbotson said that Argos had been Sainsbury’s “get out of jail” card in 2016/17, propping up its underperforming food business.

“There are lots of little things we can do in the round, but we can’t get away from the fact the market dynamics are changing”

Mike Coupe

But Coupe hit back at those comments and maintained that its core grocery business remained in a strong position.

“We have never shied away from the fact that customer shopping habits are changing and we have to adapt our business to deal with that,” Coupe said.

“Whether it’s investing in our convenience business or our online business to play to that market change, we’ve done that and we will continue to do that.

“But we also need to make sure our supermarkets are more attractive. That’s why we’ve invested a lot in the quality of products we sell and actually we’ve seen [the number of] transactions increase overall both in convenience and in supermarkets.

“By putting Argos stores into Sainsbury’s stores – and we’ve said we accelerate that programme – we get a 1% to 2% uplift in the supermarket business as well.

“There are lots of little things we can do in the round, but we can’t get away from the fact the market dynamics are changing.

“Our job is to build a business that adapts itself to those changing customer habits and needs.”